Copyright As a lover of used bookstores and delighted owner of many dusty old, out-of-print volumes plucked from $2 and 3-for$5, bins I hate to hear myself say this. But if I were a publisher I would leap at Amazon’s purported plans to offer Kindle users a Netflix-like subscription plan for e-books.
Traditionally, publishers have had only two bites at the apple: the hardcover/trade paperback window, followed by the mass market paperback release. E-books have introduced a new format but it has not yet created a new release window. Instead, the e-book release is wedged in awkwardly between or alongside the traditional windows, cannibalizing both.
Though books have long generated additional downstream commerce, through sales of used copies and even, once upon a time, through commercial rental libraries, publishers are effectively barred from participating in those markets by the first sale doctrine in copyright law.
Originally developed by courts and later codified by Congress, the first sale doctrine generally allows the owner of a lawfully made copy of a work to dispose of that copy however she wants, including by sale, rental, lending, gift-giving or using it as a coaster on a coffee table. It evolved in the 19th and early 20th century largely in response to publishers’ efforts to control or limit the downstream commerce in books. At the time, many publishers decried the sale of used books as a copyright infringement and tried to limit the practice by insisting on a minimum sale price. The courts developed the first sale doctrine to ensure that claims arising from the copyright statute, such as those raised by publishers against the sale of used books, would not conflict with the constitutional purpose of copyright itself –“to promote the progress of science and useful arts.” The solution was to encourage a robust and unfettered market in copies by denying copyright owners control over those copies after the first sale.
That by-now bedrock principle of copyright law has long limited publishers’ ability to establish the sort of ancillary revenue streams that the movie studios have long enjoyed by virtue of the sequential licensing of release windows. What Amazon appears to have mind, however (the original Wall Street Journal report was pretty sketchy), is something very much along those lines.
According to the Journal’s sources, Amazon is considering “creating a digital-book library featuring older titles,” and will offer publishers “a substantial fee for participating in the program.” I’m obviously not privy to the discussions but that sounds to me like a licensed subscription rental window coming sometime after the hardcover, paperback and new-release e-book sell-through windows. If that is indeed what Amazon has in mind, it could be the first, really new revenue stream created by new digital publishing platforms.
There are, no doubt, some first sale doctrine diehards who would argue that just as Netflix doesn’t need a license from the studios to rent DVDs through the mail by subscription, Amazon does not need a license to rent e-books by subscription. A digital file of an e-book purchased from a publisher, many would argue, is every much a lawfully made copy of the work as is a hardcover and that Amazon is free to dispose of its copies as it will.
That debate is beyond the scope of this column; let’s just say for now that relying on the first sale doctrine in this case would present Amazon with significant practical challenges, not the least being the ultimately limited number of copies of any given work it could afford to make available. What Amazon appears to be offering publishers here is a license that would allow Amazon to reproduce copies as necessary. More critically, it would give publishers an ongoing stake in a new revenue stream where previously they had none.
The Journal article noted that publishers have been cool to the idea so far, fearing it could “strain their relationships with other retailers that sell their books,” and “downgrade the value of the book business.” Anyone who has followed the content industries over the years should not be surprised by those reactions but should also recognize them as short-sighted. The movie studios have managed to muddle through those sorts of channel conflicts for years, not always happily but nonetheless. New windows always cause friction at the borders with old windows. It’s a cost of doing business.
More critically, the Amazon plan could offer publishers an opportunity to learn about consumer behavior in a new market and around a new use case for their content. That should be the upside of digital disruption, not a defect.